Economically-minded students will be disappointed to discover that the Government has scrapped the voluntary repayment bonus for student loans, effective from 1 April 2013. While the incentive was in place, borrowers who repaid more than the minimum amount required had a 10% bonus credited to that repayment.
The scheme was initially established to encourage student loan repayments and reduce the strain on the Government’s books. However, current students found the scheme to be a useful loophole, as nothing stopped them claiming the bonus while still studying.
Information in the 2012 Budget detailed the bonuses received by students. Soon after, the Treasury highlighted the repayment bonus as one of several areas of intended action. Consequently, the scheme has been scrapped.
The change to the voluntary repayment bonus is one of a number of alterations being rolled out. The loan repayment rate has increased from 10c to 12c for every $1 earned over the repayment threshold, and from 1 April 2014 the definition of “income” will be broadened to include a wider range of income types.
The threshold parental income level to qualify for student allowances has been extended until 31 March 2016, meaning fewer students will qualify each year.
In addition to these changes, the 2012 Budget also called for an “information match” between Inland Revenue and New Zealand Customs to identify student loan borrowers in serious default.
"Pay off your fucking loans" - Govt
